CrossAmerica Partners (CAPL) Q2 FY26 earnings call

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 6, 2026

Source: earnings call transcript

Executive summary

CrossAmerica Partners Q2 FY26 — Strong Adjusted EBITDA Growth and Improved Coverage

CrossAmerica Partners delivered a strong second quarter, marked by significant adjusted EBITDA growth and improved distribution coverage, despite a volatile fuel price environment impacting volumes. The company focused on controllable aspects, driving merchandise margin expansion and expense control, while strategically managing its real estate portfolio and credit facility.

Highlights

Adjusted EBITDA increased 40% to $51.8 million in Q2 FY26.
Retail segment gross profit increased 13% to $85.7 million, driven by motor fuel margins.
Wholesale segment gross profit increased 9% to $27.1 million, also due to higher fuel margins.
Merchandise margin percentage in Retail segment improved by 130 basis points to 29.5%.
Distribution coverage ratio improved to 1.68x for Q2 FY26 and 1.39x for the trailing 12 months.

Concerns

Retail same-store volume declined 11% year-over-year due to elevated fuel prices.
Wholesale segment volume declined 11% due to elevated prices and net loss of independent dealer contracts.
Net income declined to $20.8 million in Q2 FY26 from $25.2 million in Q2 FY25, primarily due to lower net gains from asset sales.

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Retail Retail segment gross profit increased primarily due to higher motor fuel gross profit, supported by elevated fuel margins despite a decline in same-store volumes. Merchandise gross profit also grew, driven by improved margin percentage and execution in key categories, offsetting traffic declines. Gross profit Q2 FY25: $76.1 millionRetail fuel gross profit increase: $7.7 millionSame-store volume decline: 11%Company-operated same-store volume decline: approximately 8%Fuel margin per gallon Q2 FY26: $0.492 per gallonFuel margin per gallon Q2 FY25: $0.37 per gallonInside sales same-store: relatively flatMerchandise margin percentage Q2 FY26: 29.5%Merchandise margin percentage increase YoY: 130 basis pointsMerchandise gross profit Q2 FY26: $31 millionMerchandise gross profit growth YoY: 2%Average company-operated site count decline YoY: 9%Operating expenses decline: $2.1 million or 4%Same-store store level operating expenses decline: approximately 3%	—	13%	—	$85.7 million
Wholesale Wholesale segment gross profit increased due to a significant rise in fuel margin per gallon, partially offset by an 11% decline in fuel volume. Volume was impacted by elevated prices and the net loss of independent dealer contracts. Operating expenses declined due to asset sales and conversions. Gross profit Q2 FY25: $24.9 millionMotor fuel gross profit increase YoY: 17%Motor fuel gross profit Q2 FY26: $17.8 millionMotor fuel gross profit Q2 FY25: $15.2 millionFuel margin per gallon increase: 31%Volume decline: 11%Same-store performance volume decline: approximately 8%Fuel margin per gallon: $0.111 per gallonOperating expenses decline: $0.8 million or 11%	—	9%	—	$27.1 million

Deals & partnerships

5 properties Real estate optimization $2.7 million

Sale of 5 properties as part of ongoing real estate optimization efforts.

Risks & headwinds

Volatile Broader Operating Environment Q2 FY26

volatile broader operating environment during the quarter

Mitigation:team remained focused on the aspects of the business that we can control

Rising Fuel Price Environment Q2 FY26

average cost of a gallon of gasoline across the country reaching the high of more than $4.50 per gallon in late May

Mitigation:ensuring our retail locations are competitively priced to balance long-term customer loyalty with the day-to-day price volatility

Challenging Fuel Volume Q2 FY26

retail segment reported an 11% decline in volume year-over-year

Mitigation:important investments we've made in recent years to expand our food operations

Net Loss of Independent Dealer Contracts Q2 FY26

remaining wholesale segment volume decline primarily due to the net loss of independent dealer contracts

Mitigation:actively preparing the portfolio for sustainable success

What to watch in Q3 FY26

Retail Fuel Margins

Q3 FY26

Current $0.492 per gallon

Target moderated

Why it matters

Fuel margins significantly impacted Q2 profitability; their moderation in Q3 will affect future earnings.

Fuel margins have generally moderated as we have started the third quarter, though we and the industry continue to experience bouts of input cost volatility with their resulting impact on margins.

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Detailed narrative

Leadership Transition

Maura Topper introduced Jon Benfield as the permanent Chief Financial Officer, highlighting his continued role in the company's strategic priorities. This appointment follows his interim period and signifies a commitment to continuity in financial leadership.

Operational Focus and Performance

The company maintained its focus on active control over retail fuel pricing, enhancing convenience store image and offerings, and ensuring efficient wholesale fuel supply. These efforts contributed to strong gross profits in both Retail and Wholesale segments, despite a volatile broader operating environment.

Fuel Market Dynamics and Margins

The second quarter was characterized by generally rising fuel prices, peaking at over $4.50 per gallon in late May, which led to elevated fuel margins. Retailers quickly transmitted increased costs to the pump, providing a practical floor to margins. However, this environment also resulted in challenging fuel volumes, with retail same-store volume declining 11% year-over-year.

Merchandise Sales and Profitability

Despite flat same-store inside sales, the retail segment saw a strong increase in merchandise margin percentage, up 130 basis points to 29.5%. This improvement was driven by a better merchandise mix and execution in key categories like food, beverage, and tobacco, contributing to a 2% increase in merchandise gross profit to $31 million.

Expense Management Initiatives

CrossAmerica achieved its seventh consecutive quarter of declining operating expenses, with total operating expenses decreasing by $2.9 million year-over-year to $55 million. This was primarily due to reduced store-level employment costs in the retail segment and a decline in controlled site count in the wholesale segment, reflecting a focus on operational efficiencies.

Real Estate Optimization and Debt Reduction

The company continued its targeted real estate optimization efforts, selling 5 properties for approximately $2.7 million in proceeds during the quarter. These asset sales, combined with strong operational results, contributed to a reduction of the credit facility balance by $10 million in Q2 and $20 million year-to-date, lowering the leverage ratio to 3.57x.

Credit Facility Amendment

An amendment to the credit facility was executed on July 15, extending the maturity date from March 31, 2028, to July 15, 2031. The amendment also removed the SOFR credit spread adjustment, further strengthening the company's financial flexibility and long-term debt profile.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.